NOTICE: All slip opinions and orders are subject to formal
revision and are superseded by the advance sheets and bound
volumes of the Official Reports. If you find a typographical
error or other formal error, please notify the Reporter of
Decisions, Supreme Judicial Court, John Adams Courthouse, 1
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us
16-P-150 Appeals Court
MARK SILVA vs. NORFOLK & DEDHAM MUTUAL FIRE INSURANCE COMPANY.
No. 16-P-150.
Barnstable. January 5, 2017. - April 26, 2017.
Present: Carhart, Massing, & Lemire, JJ.
Motor Vehicle, Insurance. Insurance, Unfair act or practice,
Settlement of claim. Consumer Protection Act, Unfair act
or practice, Insurance. Judgment, Interest. Practice,
Civil, Consumer protection case, Interest. Evidence,
Expert opinion. Witness, Expert.
Civil action commenced in the Superior Court Department on
January 13, 2011.
The case was heard by Robert C. Rufo, J.
Richard T. Corbett for the plaintiff.
Kevin M. Truland (Ralph C. Sullivan also present) for the
defendant.
MASSING, J. After a jury-waived trial in the Superior
Court on claims of unfair settlement practices under G. L.
c. 93A and G. L. c. 176D, the judge found that the defendant,
Norfolk & Dedham Mutual Fire Insurance Company (Norfolk &
2
Dedham), did not engage in unfair practices in its handling of
the plaintiff's, Mark Silva's, personal injury claim against
Norfolk & Dedham's insured. The judge also found, however, that
after Silva obtained a substantial jury verdict on his personal
injury claim and while the appeal from that judgment was pending
in this court,1 Norfolk & Dedham violated c. 93A when it offered
to settle the claim for the policy limit without also offering
postjudgment interest.
Silva appeals, arguing that the judge erred by (1) finding
that Norfolk & Dedham did not engage in unfair settlement
practices, (2) precluding Silva's expert from testifying that
Norfolk & Dedham engaged in unfair practices, and (3) finding
that Norfolk & Dedham's failure to include postjudgment interest
in its settlement offer, although a violation of c. 93A, was not
wilful and knowing. Norfolk & Dedham cross appeals, arguing
that its failure to offer postjudgment interest did not violate
c. 93A whatsoever. We reverse the award of damages, prejudgment
interest, costs, and attorney's fees with respect to its failure
to offer postjudgment interest, and affirm the amended judgment
in all other respects.
Background. We summarize the judge's comprehensive
findings concerning Norfolk & Dedham's investigation and
handling of Silva's personal injury claim, reserving other facts
1
See Silva v. McQuinn, 79 Mass. App. Ct. 1109 (2011).
3
for later discussion. On March 9, 2005, Silva, a tow truck
operator, was assisting a vehicle stuck in a snow drift on Route
6 in Provincetown. Silva had pulled his truck to the side of
the road and hooked up a tow line to the disabled car. The road
conditions were "snowy, slushy, and icy." Dorothy McQuinn was
driving on Route 6 with her windshield fogged up, obstructing
her view of the road, when she rear-ended Silva, who "was tossed
inside the truck." The next day, Norfolk & Dedham, McQuinn's
insurer, was informed of the collision and opened a claim.
McQuinn had bodily injury coverage of $250,000 per person,
$500,000 per accident.
Norfolk & Dedham's initial efforts to obtain information
regarding Silva and his injuries were mostly fruitless. Silva's
automobile insurance carrier and his worker's compensation
carrier were initially reluctant to disclose to Norfolk & Dedham
any information from their own investigations. (Norfolk &
Dedham did not obtain access to Silva's medical records until
more than three years after the accident, after Silva filed his
personal injury suit against McQuinn.) However, Norfolk &
Dedham slowly gathered information casting doubt on the
genuineness of Silva's claimed injuries. The judge found that
"[t]his series of events occurring between 2006 and 2008 gave
Norfolk & Dedham reason to doubt Silva's general veracity and be
4
suspicious of not only his wage claim but also his claims of
bodily injury."
Based on the communications and miscommunications2 between
Silva's attorney (White) and the attorney that Norfolk & Dedham
assigned to represent McQuinn (Feeney), prior to trial "Attorney
Feeney did not have an understanding of what Attorney White's
position was relative to settlement." On the first day of trial
of the personal injury suit, January 19, 2010, the presiding
judge held a lobby conference to discuss the possibility of
settlement. White said that no offer had been made, and Feeney
responded that he had never received a demand. Feeney made two
settlement offers during the personal injury trial -- $25,000
and $60,000 -- both of which were rejected. The jury returned a
verdict for Silva and awarded damages of $818,000.
Discussion. 1. Pretrial conduct. Silva argues that
Norfolk & Dedham's pretrial handling of his personal injury
claim violated subsections (d) and (f) of G. L. c. 176D, § 3(9).
"General Laws c. 93A, § 2(a), states that '[u]nfair methods of
competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce are . . . unlawful.'" Bobick
2
Silva's attorney sent Norfolk & Dedham a demand letter
dated June 19, 2008. This letter was later included in Silva's
discovery responses in the personal injury suit. Nevertheless,
the judge found that "due to inadvertence and mistake by
[McQuinn's attorney] and Norfolk & Dedham," neither saw the
demand letter prior to the personal injury trial.
5
v. United States Fid. & Guar. Ins. Co., 439 Mass. 652, 658
(2003), quoting from G. L. c. 93A, § 2(a). General Laws
c. 176D, § 3(9), inserted by St. 1972, c. 543, § 1, bans "unfair
or deceptive acts or practices in the business of insurance,"
including "[u]nfair claim settlement practices." "[T]he former
statute incorporates the latter, and [accordingly] an insurer
that has violated G. L. c. 176D, § 3(9) . . . by definition, has
violated the prohibition in G. L. c. 93A, § 2, against the
commission of unfair or deceptive acts or practices." Hopkins
v. Liberty Mut. Ins. Co., 434 Mass. 556, 564 (2001).
As we are "reviewing a trial judge's conclusion that
particular conduct was or was not unfair or deceptive, we review
the judge's subsidiary findings of fact under the clearly
erroneous standard, while reviewing de novo his ultimate
conclusion of law." Zabin v. Picciotto, 73 Mass. App. Ct. 141,
170 (2008). See Demoulas v. Demoulas Super Mkts., Inc., 424
Mass. 501, 510 (1997), quoting from T.L. Edwards, Inc. v.
Fields, 371 Mass. 895, 896 (1976) (judge's findings of fact not
clearly erroneous "where such findings are supported 'on any
reasonable view of the evidence, including all rational
inferences of which it was susceptible'").
a. Norfolk & Dedham's investigation. "The question under
[G. L. c. 176D, § 3(9)](d)[,] is whether [Norfolk & Dedham]
refused to pay the claim without conducting a reasonable
6
investigation based on all available information." Van Dyke v.
St. Paul Fire & Marine Ins. Co., 388 Mass. 671, 676 (1983). We
agree with the judge that Norfolk & Dedham conducted a
reasonable investigation.
The judge's twenty-seven pages of findings under the
heading "Pre-Trial Claims Handling" reflect the voluminous
record in this case documenting Norfolk & Dedham's inquiry into
the circumstances of the accident and Silva's injuries. The
record includes sixty-six pages of log entries made by Norfolk &
Dedham claims adjusters over the history of Silva's claim. Six
days after learning of the accident, Norfolk & Dedham assigned
an independent adjuster to investigate the claim. Thereafter,
through its own claims adjusters and other sources, including
private investigators, Silva's worker's compensation carrier,
Silva's automobile insurance carrier, and Silva's discovery
responses and deposition testimony, Norfolk & Dedham gradually
acquired information that gave it "a reasonable basis for
regarding as suspicious" Silva's claim. Trempe v. Aetna Cas. &
Sur. Co., 20 Mass. App. Ct. 448, 455 (1985). Norfolk & Dedham
also sought the opinions of Dr. David Gushue, a biomechanical
engineer, and Dr. Mark Weiner, a neurologist, concerning the
cause and extent of Silva's injuries.
The judge found that "there was no testimony at trial
identifying specific steps that Norfolk & Dedham should have
7
taken but did not in investigating Silva's bodily injury claim."
The judge did not err in determining that Norfolk & Dedham was
not "inattentive" or "unreasonable" in its investigation of the
accident. McLaughlin v. American States Ins. Co., 90 Mass. App.
Ct. 22, 32 (2016).
b. Norfolk & Dedham's failure to offer a settlement.
Chapter 176D requires an insurer "to effectuate [a] prompt, fair
and equitable settlement[] of claims in which liability has
become reasonably clear." Bobick, 439 Mass. at 658-659, quoting
from G. L. c. 176D, § 3(9)(f). "Liability, as the word is used
in this context, 'encompasses both fault and damages.'"
O'Leary-Alison v. Metropolitan Property & Cas. Ins. Co., 52
Mass. App. Ct. 214, 217 (2001), quoting from Clegg v. Butler,
424 Mass. 413, 420 (1997). "To determine when an insured's
liability became 'reasonably clear' an objective test is used.
The fact finder determines 'whether a reasonable person, with
knowledge of the relevant facts and law, would probably have
concluded, for good reason, that the insure[d] was liable to the
plaintiff.'" O'Leary-Alison, supra, quoting from Demeo v. State
Farm Mut. Auto Ins. Co., 38 Mass. App. Ct. 955, 956-957 (1995).
Here, Norfolk & Dedham "had multiple reasons to be
skeptical of [Silva's] damage claims" from the inception of its
investigation just days after the accident. O'Leary-Alison,
supra at 217-218. A week after the accident, McQuinn told a
8
Norfolk & Dedham claims adjuster "that she could not imagine how
[Silva] could possibly have been injured." Eight days later
Norfolk & Dedham received information that after the accident,
Silva had not only towed McQuinn's car from the scene, but also
"returned to complete the original tow he had been working on
when the accident occurred." Within one month of the accident,
a private investigator informed Norfolk & Dedham that Silva "was
observed at [his automobile service station] and it appeared he
was working a very full and busy schedule."
Norfolk and Dedham's skepticism continued when "Silva
waited a year after the accident to claim disability from
performing work as a tow truck driver, continued to work a full
towing schedule while claiming he could only perform desk work,
[and] sought workers' compensation benefits while collecting
unemployment benefits." Norfolk & Dedham also learned that
Silva's worker's compensation insurer questioned the existence
of causation between the accident and Silva's claimed injuries.
In addition, "[a]lthough Attorney White initially claimed three
fractured vertebrae, Silva's injury was revealed to be three
herniated disks, two of which resolved themselves."
Gushue and Weiner reviewed evidence of the accident and
Silva's medical records. According to Gushue, the impact of the
accident would have generated "the same level of force [Silva]
experiences on a daily basis while going about his usual
9
routine." Norfolk & Dedham noted in its file that Gushue's
report "looked 'positively solid' for the defense." Weiner
opined that Silva's treatment after June, 2006, was "not
causally related to the injuries sustained as a result of the
motor vehicle accident."
Although fault for the accident may have been clear, the
"damages attributable to [McQuinn] . . . was still the subject
of good faith disagreement." Bobick, 439 Mass. at 660. "So
long as the insurer acts in good faith, the insurer is not held
to standards of omniscience or perfection." Bolden v. O'Connor
Café of Worcester, Inc., 50 Mass. App. Ct. 56, 67 (2000),
quoting from Peckham v. Continental Cas. Ins. Co., 895 F.2d 830,
835 (1st Cir. 1990). Here, Norfolk & Dedham "had a reasonable
basis for resisting liability." Trempe, 20 Mass. App. Ct. at
452.
Accordingly, we conclude that "there existed a legitimate
difference of opinion as to the extent of [McQuinn's]
liability," Bobick, 439 Mass. at 660, which was "outside the
scope of the punitive aspects of the combined application of
c. 93A and c. 176D." Guity v. Commerce Ins. Co., 36 Mass. App.
Ct. 339, 343 (1994).
Disputing this conclusion, Silva argues that some of the
evidence on which the judge relied was not known to Norfolk &
Dedham until after the judgment in the underlying personal
10
injury trial and, therefore, could not have been part of Norfolk
& Dedham's basis for doubting Silva's claim. Specifically,
Silva complains that the judge should not have considered
certain "bank and tax records" showing wages and benefits Silva
received in 2005, as well as "investigative reports and
summaries of surveillance" indicating that Silva continued to
work "full-tilt" after the accident. The judge did not err in
considering this after-acquired evidence, which merely confirmed
that Norfolk & Dedham had a reasonable basis to resist
settlement and was cumulative of the facts Norfolk & Dedham had
developed during its investigation.
To be sure, settlement offers must be made in good faith
given the insurer's "knowledge at the time of the relevant facts
and law concerning [Silva's] claim." Bolden, 50 Mass. App. Ct.
at 66. However, "[e]ven if [Norfolk & Dedham] violated G. L.
c. 176D, § 3(9)(d) and (f), [Silva] had to be adversely affected
by that violation in order to be entitled to recover under G. L.
c. 93A, § 9." Van Dyke, 388 Mass. at 678. See Casavant v.
Norwegian Cruise Line, Ltd., 460 Mass. 500, 503 (2011) (to
recover c. 93A damages, plaintiff must show "causal connection
between the deception and the loss and that the loss was
foreseeable as a result of the deception" [quotation omitted]).
Nothing in Bolden, supra, or Parker v. D'Avolio, 40 Mass. App.
11
Ct. 394, 395 (1996), with respect to c. 93A liability undermines
this holding of Van Dyke with respect to causation.
Just as Norfolk & Dedham relied on new evidence to show its
past conduct was reasonable, it was open to Silva to show that
further investigation by Norfolk & Dedham would have unearthed
evidence that made its refusal to settle unreasonable.3 If
Norfolk & Dedham had insufficient grounds for not settling with
Silva prior to trial, "it ran the risk that subsequent events
would not support its assertion that its insured[] had a
reasonable defense." Van Dyke, supra. Here, however, Norfolk &
Dedham's subsequent discoveries supported the reasonableness of
its pretrial investigation and settlement stance, and the judge
did not err in considering this evidence.
2. Silva's expert. Silva, who settled his claims against
McQuinn in exchange for the assignment of her rights against
Norfolk & Dedham, sought to introduce expert testimony to prove
that Norfolk & Dedham violated G. L. c. 176D, and therefore
3
In this vein, the judge considered the reasonableness of
Norfolk & Dedham’s settlement offers in light of the substantial
jury verdict for Silva. The judge concluded that "Norfolk &
Dedham could not have anticipated the $818,000 jury verdict and
that verdict is not an appropriate sum against which to gauge
the reasonableness of the mid-trial settlement offers." We
agree. See Guity, 36 Mass. App. Ct. at 343 ("A plausible,
reasoned legal position that may ultimately turn out to be
mistaken -- or simply, as here, unsuccessful -- is outside the
scope of the punitive aspects of the combined application of
c. 93A and c. 176D."); O'Leary-Alison, 52 Mass. App. Ct. at 218
("An insurer's good faith, but mistaken, valuation of damages
does not constitute a violation of c. 176D").
12
c. 93A, by exposing McQuinn to a judgment exceeding her policy
limits. See, e.g., Gore v. Arbella Mut. Ins. Co., 77 Mass. App.
Ct. 518, 526 (2010) ("If the insurer violated the law in failing
to settle for the policy limits, then the insurer will be liable
to the insured for the damages exceeding the policy limit").
Silva's expert, Attorney Paul Kelleher, offered an opinion that
Norfolk & Dedham's adjusters and investigators "engaged in
unfair and deceptive claims practices," based on a list of
activities that he deemed to be "unfair claims settlement
practices." The judge, however, did not allow Kelleher to
testify because he "did not present admissible expert testimony
that no reasonable insurer would have failed to settle his case
against McQuinn within the policy limits." In the absence of
such proof, the judge found that Norfolk & Dedham's failure to
offer the policy limit prior to trial did not amount to an
unfair settlement practice. Silva contends that the judge
erroneously excluded Kelleher's proposed testimony.
Kelleher's proffered testimony that Norfolk & Dedham's
conduct was unfair or deceptive was merely an opinion of law,
which is not a proper subject for expert testimony. See Birch
v. Strout, 303 Mass. 28, 32 (1939). "A ruling that conduct
violates G. L. c. 93A is a legal . . . determination." R.W.
Granger & Sons, Inc. v. J & S Insulation, Inc., 435 Mass. 66, 73
(2001). While "[a]n opinion within the domain of the expert's
13
professional knowledge may be admissible even if the expert's
testimony touches on the ultimate issues before the jury,"
Commonwealth v. Woods, 419 Mass. 366, 374–375 (1995), Kelleher's
proposed testimony "in effect would have been an opinion
involving at once a conclusion of law and a view on the ultimate
issue of the defendant's [liability]." Commonwealth v. Brady,
370 Mass. 630, 635 (1976) (prohibiting insurance agent from
interpreting "legal sufficiency of the defendant's [insurance]
coverage"). Such testimony was properly excluded. See
Mass. G. Evid. § 704 Note, at 241 (2016) (where "questions call
for opinions on matters of law or mixed questions of law and
fact . . . the [trier of fact] must be allowed to draw [its] own
conclusions from the evidence").
"The general rule in this Commonwealth is that an insurer
is held to a standard of reasonable conduct in its defense of
its insured." Hartford Cas. Ins. Co. v. New Hampshire Ins. Co.,
417 Mass. 115, 118 (1994) (Hartford Casualty). An insurer can
be liable for negligent handling of the defense of a covered
claim or for negligent handling of its settlement. Id. at 120.
The test for the latter "is not whether a reasonable insurer
might have settled the case within the policy limits, but rather
whether no reasonable insurer would have failed to settle the
case within the policy limits." Id. at 121. Because such proof
"is not a matter within the common knowledge of the ordinary lay
14
person," Herbert A. Sullivan, Inc. v. Utica Mut. Ins. Co., 439
Mass. 387, 402-403 (2003), expert testimony as to sound
insurance practices is necessary.4 See id. at 403. Silva's
proposed expert offered no such testimony.
Silva argues that Hartford Casualty applies only to common
law negligence claims, and that because his claim arises under
c. 93A, the proper standard is whether the insurer's conduct was
unfair or deceptive, as his expert would have testified.
Although whether Norfolk & Dedham's conduct was unfair or
deceptive is indeed the ultimate issue, we agree with the judge
that to prevail on this claim, Silva was required, at a minimum,
to satisfy the Hartford Casualty standard.
"[A] violation of G. L. c. 93A requires, at the very least,
more than a finding of mere negligence." Darviris v. Petros,
442 Mass. 274, 278 (2004). In determining the liability of an
insurer for failing to settle a claim, the court in Hartford
Casualty rejected the "traditional[] standard of whether the
insurer exercised good faith judgment on the subject." 417
Mass. at 118. Instead, the court adopted the less stringent
negligence standard -- the same standard that had previously
been applied to the duty to defend. Id. at 120-121. Silva was
4
This is not a case where, because of the "gross or
obvious" nature of the acts, expert testimony is unnecessary to
prove that a party was negligent. See Herbert A. Sullivan,
supra at 403.
15
required to satisfy at least this standard. See id. at 120
(noting that c. 93A "imposes standards of reasonable care"). If
Silva could not establish that Norfolk & Dedham acted
negligently in failing to offer the policy limit, he would not
be able to show that such conduct was unfair or deceptive. See
Swanson v. Bankers Life Co., 389 Mass. 345, 349 (1983) ("not
every negligent act is unfair or deceptive and thus unlawful
under G. L. c. 93A, § 2"); SMS Fin. V, LLC v. Conti, 68 Mass.
App. Ct. 738, 748 (2007) ("negligence without more does not
constitute an unfair or deceptive practice under G. L. c. 93A").
3. Posttrial conduct. On May 24, 2010, while the appeal
from the personal injury verdict was pending, Silva informed
Norfolk & Dedham that he was "willing to settle his claim for
the entire amount of the judgment plus interest, $1,011,873.37."
Norfolk & Dedham responded in a letter dated June 2, 2010,
offering to settle the case for $250,000, the policy limit, "in
exchange for a release of its insured." The judge determined
that "the failure to include post-judgment interest in the June
2, 2010 settlement offer violated Chapters 176D and 93A," but
also that the "violation of Chapter 93A was not knowing and
willful so as to warrant punitive damages."5 Norfolk & Dedham
5
The judge calculated Silva's damages as the loss of use of
the payment Norfolk & Dedham should have offered on June 2, 2010
(the $250,000 policy limit plus the postjudgment interest due
through that date), from June 2, 2010, through January 11, 2011,
16
argues that the judge erred as a matter of law in finding a
violation.6 Silva, for his part, argues that the judge erred by
finding that the violation was not knowing or wilful and
declining to order double or treble damages. We agree with
Norfolk & Dedham.
The judge relied on Davis v. Allstate Ins. Co., 434 Mass.
174, 181-183 (2001), for the proposition that postjudgment
interest must be included in a postjudgment settlement offer,
even if the judgment is greater than the policy limits. Our
reading of Davis, however, yields a different holding: after
judgment enters for the claimant, if the insurer does not
unconditionally offer its policy limit to satisfy the judgment,
the insurer is responsible for postjudgment interest on the
entire amount of the judgment until an unconditional offer is
made. Davis, therefore, concerns when an insurer's obligation
when Norfolk & Dedham paid Silva $371,060.39 to settle Silva's
claims against McQuinn. The damages thus amounted to
$10,465.47, plus prejudgment interest, costs, and attorney's
fees, for a total amended judgment of $21,372.66.
6
Norfolk & Dedham also argues that the c. 93A claim was
barred because Silva failed to make a specific demand for
postjudgment interest in his demand letter. See G. L. c. 93A,
§ 9(3). While Norfolk & Dedham asserted § 9(3) as an
affirmative defense in its answer, it did not raise this issue
in its opposition to Silva's motion for summary judgment "or
otherwise flag it prior to (or even after) trial." Diamond v.
Pappathanasi, 78 Mass. App. Ct. 77, 89 (2010). "Having
proceeded through a full trial to determine the truth of the
allegations set forth in the plaintiff's complaint, we believe
that it is too late for the defendant[] to argue the point."
Ibid.
17
to pay postjudgment interest is tolled, not whether it must be
included in any postjudgment offer to settle.
Here, Norfolk & Dedham made a conditional offer: the
policy limit of $250,000 in exchange for the release of its
insured. Such an offer was not improper. See, e.g., Lazaris v.
Metropolitan Property & Cas. Ins. Co., 428 Mass. 502, 505-506
(1998); Caira v. Zurich Am. Ins. Co., 91 Mass. App. Ct.
374, (2017). However, it did expose Norfolk & Dedham to the
risk that if Silva declined the offer (which he did), Norfolk &
Dedham's obligation to pay postjudgment interest on the entire
judgment would continue. See Davis, supra at 180-181. When
Silva and Norfolk & Dedham finally agreed to the terms of a
settlement of Silva's claims against McQuinn, Norfolk & Dedham
paid the postjudgment interest due to Silva. See note 5, supra.
Its actions were not unfair or deceptive.
Conclusion. We reverse the portions of the amended
judgment entered on November 23, 2015, awarding Silva damages,
prejudgment interest, costs, and attorney's fees for Norfolk &
Dedham's failure to include postjudgment interest in its
settlement offer. In all other respects, the amended judgment
is affirmed.
So ordered.